Charles Schwab Corp. (SCHW) shares were inching lower in trading Monday after the discount broker offered up mixed results for its third quarter.
Before the market open, Charles Schwab reported profit for the three months ended in September that beat Wall Street views but revenue that came in short of estimates. For the third quarter, it had earnings per share of $0.42 and revenue of $2.165 billion. Analysts, according to Zacks Investment Research, had expected the San Francisco-based brokerage firm to report earnings of $0.41 a share and revenue of $2.9 billion. Had it delivered on the revenue front it would have represented a 14% year-over-year increase.
During the third quarter, Charles Schwab said net interest revenue increased 28% to $1.08 billion while revenue from asset management fees jumped 8% to $861 million. On the negative side, trading revenue declined 21% to $151 million. During the quarter Schwab was able to open 216,000 new retail brokerage accounts, which is up 29% from last year’s third quarter. Total client assets increased 17% to $3.18 trillion and core net new assets jumped 72% to $51.6 billion.
“The investments we’ve made in our clients in recent years are helping fuel stronger business momentum. Clients opened more than 100,000 new brokerage accounts each month during the third quarter, marking a record-breaking ten straight months in excess of 100,000. We ended September serving 10.6 million active brokerage accounts, 1.2 million banking accounts, and 1.6 million retirement plan participants. Core net new assets of $51.6 billion were 72% higher than a year ago and the highest quarter in Schwab’s history,” Chief Executive Walt Bettinger said in prepared remarks. “In just nine months we’ve generated $136.7 billion in core net new assets – enough to surpass all but one of our prior full-year results.” Recently shares of Charles Schwab were down 1.13% or $0.51 to $44.22 a share.
Heading into the earnings report some Wall Street watchers expected Schwab to post an in-line third quarter. JMP Securities analyst Devin Ryan was one, saying in a recent research report that Schwab should have a quarter that while it doesn’t surprise, meets expectations. The analyst thinks the same of rival TD Ameritrade and predicts competitor E*Trade will surprise on the upside. E*Trade is slated to weigh in with quarterly earnings on Thursday (Oct. 19.) Wall Street is looking for earnings of $0.51 a share, flat from a year-ago and revenue of $596 million, which would mark a 23% increase from last year’s third quarter.